Per MLBTR, yes, the Dodgers will be entering uncharted financial territory with Snell, whose contract, they say, will probably be about $165M in net present value when the deferrals are set to today's financial values.
And per the header, here's the side effect:
In any case, the deal is likely to push the Dodgers’ competitive balance tax figure north of $300MM. They’ll almost certainly land in the fourth and final tier of penalization, which begins at $301MM. The Dodgers are subject to the highest tier of escalation penalties for paying the tax in at least three straight seasons. The Snell deal itself will cost the Dodgers something in the range of $25-30MM in taxes by vaulting them from the middle of the second penalization tier to the start of the highest tax bracket. Future spending will be taxed at the maximum 110% clip.
(Cot's Contracts estimates they'll be at $307M for CBA purposes.)
So, that means?
Per MLB, here's more, starting with the "baseline" lux tax being $241M for next year, which the $301M means $60M more, along with other information:
A club that exceeds the Competitive Balance Tax threshold is subject to an increasing tax rate depending on how many consecutive years it has done so.
First year: 20 percent tax on all overages
Second consecutive year: 30 percent
Third consecutive year or more: 50 percent
There’s also a surcharge threshold for clubs that exceed the base threshold by $20 million or more. …
$60 million or more: 60 percent surcharge
Clubs that are $40 million or more above the threshold shall have their highest selection in the next Rule 4 Draft moved back 10 places unless the pick falls in the top six. In that case, the team will have its second-highest selection moved back 10 places instead.
I don't think the Dodgers care about the draft choice slump.
Otherwise? Yes, per the last sentence in the MLBTR quote? A 50 percent penalty for the third consecutive year, plus the 60 percent surcharge? That's 110 percent total. That doesn't count Snell himself, but any future contracts? 110 percent.
And, they'll be there for some time.
Per Cot's on the Dodgers?
Snell, Glasnow, Ohtani, Betts, Freeman, Yamamoto are all signed through 2027. Freeman drops off after that, and Glasnow after 2028.
10 comments
They don’t care. They want another few trophies.
Welp I guess the tickets are going to be 100’s of dollars now.
As a Mets fan, I envy watching the Dodgers, Phillies, and Yankees just have star players fall into their lap. The Mets have to severely overpay their own homegrown talent just to keep them.
Everyone pissed and wants a salary cap but don’t be mad at the dodgers for playing by the rules 🤷♂️ good for their fans and team by showing how cheap/incompetent these other owners are
Weren’t there stiffer draft pick penalties before the last strike/contract? I liked that better (if there in fact were).
What I’m hearing is, Soto would cost them about $100MM per season ($45MM salary plus 110% luxury tax hit)
They don’t care. The money from Ohtani alone in one season pays for all their contracts and luxury tax for the next decade.
Yes the numbers are pretty dang crazy. But I say good for them. It’s way better than having a team where the owner(s) are very stingy with their team budget and try to play money ball season in and season out.
Look at the satisfaction of 2 die hard fan bases in California. The Athletics and the Dodgers, I wonder who is appreciative of their franchise more…. hrmmmm?
NBA is way more aggressive. I believe above the second apron is 300% when you get into repeater land
Sounds like we need another higher tier with more penalties